The role of the CFO — and the finance function — is dramatically changing. CFOs are uniquely qualified to play a more active and strategic part, beyond the tactical applications of the finance function, to help drive transformation around the company's business objectives. And with an ever-changing business environment, they also need to keep a sharp eye on their market, competitors, regulators, investors and other external factors that may impact their operations and outlook.
That's a lot for one person to manage, which is why it's so important to have the right person as CFO. In my work with clients, we often see three different types of finance leaders:
- The Accountability CFO: Leaders who are especially skilled in tackling challenges and righting issues that help build trust with stakeholders — whether that's employees, customers, clients, regulators or others. In many ways, they can be "fixers," and they are well-suited to businesses that are overcoming challenges or working to establish new relationships or business strategies — or perhaps repair the organization's public image.
- The Deal-Making CFO: Individuals who are skilled at understanding the business landscape and identifying deal and funding opportunities for their organization. These CFOs are well-suited for companies in positions to grow their business or shift strategies.
- The Operational CFO: Executives who use an enterprise-wide lens and are in tune with each operational aspect of the business. These finance leaders are the company's air traffic controller, someone who is at the center of understanding and guiding the organization to meet its strategic goals.
All in all, most CFOs possess a blend of these skills across the different types, but usually lean one way or another. Each archetype has different strengths and weaknesses, and one is not inherently better than another. However, different types of CFOs may be better fits for organizations depending on what's happening within the company or its industry — and different times generally require certain types of skill sets.
For example, as we look around our current and future business, geopolitical and economic landscape, there are challenges most companies will continue to face throughout the coming months or years. To best address these issues, one CFO archetype's skill sets are becoming increasingly critical for success.
Why this is an opportune time for the Operational CFO
In the current environment — with the unprecedented pace of change, geopolitical and economic uncertainty, and tight labor market — CFOs often need to lean into their operations skill sets to manage the many internal and external factors impacting their business. Those who keep a keen eye on the business operations and external forces are better positioned to understand and respond to risks and opportunities. The Operational CFO — who can act as the company's air traffic controller — is uniquely fit for this complicated and multifaceted business environment.
The finance leaders who are most successful are the ones who can work across the full enterprise — tax, risk, government affairs, sustainability, human resources and more — and partner with other functions to position their enterprise to respond to new laws and regulations and changes in customer demand and investor expectations.
But CFOs can't do this alone — and the Operational CFO's enterprise-wide approach provides them with the visibility, understanding and relationships to strategically partner and collaborate across the company. They will need to align with other senior leaders around their customers' and employees' top priorities and focus the entire organization on the most important initiatives to meet their strategic objectives.
As the business environment continues to shift, the finance function is also evolving from being transactional and "scorekeeping" to being more analytical and strategic. To do this successfully, companies need the right CFO leading the finance function as it changes to provide more strategic counsel and value to the business. And with so many external forces — social, political and economic — and internal changes impacting companies, Operational CFOs are best positioned to successfully lead the finance function and their business into the future.
